As tokenization of real-world assets (RWA) increases, the crypto industry is entering uncharted territory, bringing traditional equities, private credit, and commercial paper on-chain and uncovering potential critical risks along the way.
Marcin Kaźmierczak, co-founder of oracle provider RedStone, says one risk is potentially being overlooked: weekends, where cryptocurrencies trade 24/7, while Wall Street does not.
In traditional finance, if disaster hits a company over the weekend, the market is closed, and then the stock “drops” when the opening bell rings on Monday. Meanwhile, in the crypto market, trading never stops. As more stocks are introduced on-chain, the gap between weekend trading on the blockchain for traditional stocks and the market opening on Monday could pose a risk, according to Kaźmierczak.
For example, a tokenized version of Tesla stock traded on a decentralized exchange allows traders to buy and sell it at 3:00 a.m. on Sundays, while the TradFi market remains closed.
“Imagine if a Tesla factory explodes this weekend: traditional markets are closed, but on-chain markets are open,” Kaźmierczak said in an interview with CoinDesk at Devconnect Buenos Aires. “We could see a dislocation of tokenized stocks relative to the real value of the Nasdaq.”
This mismatch, he says, could create what he calls “price dislocation.”,” where an on-chain asset appears stable, but only because oracles, which send data from the outside world to a blockchain, have stopped updating prices. Major providers typically freeze stock price feeds when U.S. markets close at 4 p.m. ET on Friday, and do not resume until Monday morning. In this window, on-chain versions of Tesla, or any other security, could continue to trade, even if their actual price should have changed drastically.
Most tokenized stock trading activity currently focuses on centralized exchanges, where trading of these products is often limited during the weekend. But the industry’s goal is to make these shares tokenized permissionless and available in DeFi protocols. This means 24/7 activity.
If the oracle is not updated before markets reopen, on-chain protocols could trade at “phantom” prices, creating huge arbitrage opportunities or leaving lending protocols undercollateralized.
“Inherent risk”
The problem intensifies with complexity.
Although stablecoins are relatively safe, Kaźmierczak pointed out that the market is moving towards more complex products, such as tokenized credit, commercial paper and stock wallets.
“Essentially, we are seeing the launch of an on-chain hedge fund,” Kaźmierczak noted, describing future portfolios that could be “50% allocated to Treasuries, 20% to private credit, 20% to commercial paper and 10% actively managed.”
If oracles lag behind real-world volatility, structured DeFi protocols could end up with poor asset pricing. RedStone advocates a modular Oracle architecture and supports both “Push” and “Pull” models. In the “Pull” model, users receive on-chain data when they interact with a protocol, meaning “the data is always fresh,” according to Kaźmierczak. He admitted, however, that most protocols still rely on the old model because it is easier to integrate.
“Right now, probably 90% of solutions are using Push Oracle,” he said, noting that while “Pull” was an innovation in scaling, the majority of the market is still adapting the existing standard. Until oracles and protocols evolve to account for these time lags, Kaźmierczak suggested that the principle of 24/7 token finance carries inherent risks.
As more RWAs come online, the challenge will be managing the gap between open protocols and traditional closed markets.
“We still have to see how they perform this weekend,” Kaźmierczak warned.
Read more: Nasdaq seeks approval from US SEC to tokenize stocks
